Williams v. The Estates LLC

Docket Number1:19-CV-1076
Decision Date02 June 2022
PartiesBRIAN C. WILLIAMS, et al., Plaintiffs, v. THE ESTATES LLC, et al., Defendants.
CourtU.S. District Court — Middle District of North Carolina
MEMORANDUM OPINION AND ORDER

Catherine C. Eagles, District Judge

After plaintiffs Brian Williams, Jairo da Costa and Maricol de Leon, and Mike Gustafson fell behind on their homeowners' dues, defendants involved in a bid-rigging scheme made the winning bids at public foreclosures on their homes. Following a trial, the jury found that the defendants violated state and federal antitrust laws, engaged in conduct amounting to extortion or attempted extortion, and were unjustly enriched by their illegal conduct. The jury awarded substantial damages, and the plaintiffs seek entry of final judgment and a permanent injunction.

Most of the requested permanent injunctive relief is appropriate because remedies at law are inadequate to address the plaintiffs' irreparable injuries, the relief is tailored to address the effects of the plaintiffs' antitrust injury and prevent recurring antitrust violations, and injunctive relief serves the public interest. That injunctive relief will be granted. But some of the requested permanent injunctive relief may be anticompetitive or more burdensome to the defendants than necessary and will thus be denied.

I. Factual Findings

To decide on appropriate equitable relief, the Court must respect and apply the jury's binding factual findings. See Steves & Sons, Inc. v. JELD-WEN, Inc., 988 F.3d 690, 703 n.2 (4th Cir. 2021). This is not a problem; the jury's verdict was supported by substantial persuasive evidence and the defendants' evidence was weak.

a. Jury Findings

After hearing several days of evidence, the jury returned a verdict finding that the various defendants[1] engaged in a bid-rigging conspiracy in violation of the Sherman Act and state law by agreeing to limit bids by Estates members to one Estates member per property during the time they were placing bids on the properties of the plaintiffs. Doc. 235 (Jury Verdict, Issues 1, 4, 7). To compensate the plaintiffs for injuries caused by these federal and state antitrust violations, the jury awarded $87, 300 in damages to Mr. Williams, id. at 2; $85, 000 in damages to Mr. da Costa and Ms. de Leon, id. at 6; and $34, 900 in damages to Mr. Gustafson. Id. at 10.

The jury also found that some of the defendants used the pending foreclosures to attempt to extort funds from Mr. Williams and from Mr. da Costa and Ms. de Leon, id. (Jury Verdict, Issues 2 and 5), and to obtain an interest in Mr. Gustafson's home by misrepresenting eviction procedures to his ex-wife, Karen Gustafson. Id. (Jury Verdict, Issue 8). To compensate the plaintiffs for injuries caused by the defendants' attempted extortions and misrepresentations, the jury awarded $35, 000 in damages to Mr. Williams, id. at 3; $50, 000 in damages to Mr. da Costa and Ms. de Leon, id. at 7; and $10, 000 in damages to Mr. Gustafson. Id. at 11.

Finally, the jury found that some of the defendants were unjustly enriched by their conduct at the expense of the plaintiffs. Id. (Jury Verdict, Issues 3, 6, 9). To prevent the defendants from being unjustly enriched by their misconduct, the jury awarded damages in the amount of $110, 000 to Mr. Williams, id. at 4; $110, 000 to Mr. da Costa and Ms. de Leon, id. at 8; and $55, 000 to Mr. Gustafson. Id. at 12.

b. General Findings of Fact

Based on the evidence at trial, and consistent with the jury's verdict, the Court finds the following facts by a preponderance of the evidence. See, e.g., Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1182 n.10 (11th Cir. 2007). Additional factual findings will be made throughout this order as needed to address specific requests for injunctive relief.

The Estates LLC is a membership-based LLC founded by Craig Brooksby that operates across multiple states, including North Carolina. It has at least one employee in Bangladesh and contracts with agents in several states to provide various services to the Estates and its members.

The Estates requires members to pay a monthly subscription fee for access to its services. This includes exclusive access to the Estates' website, http://www.estatestracking.com. The website features an online database providing real estate information on various properties in foreclosure or otherwise for sale as compiled from public data, including information such as estimated debt on a property, estimated value of a property, and location of a property.

Estates members submit internal bids on properties listed on the Estates' website by clicking on a “Buy It” button and disclosing the maximum amount they would pay for the property in question. Based on that information, Mr. Brooksby, the acquisition assistants retained by the Estates, or some other agent of the Estates, selects one bidder the Estates will represent in submitting bids at a public foreclosure auction or in the upset bid process. The Estates often does not choose the member offering the highest amount, instead frequently choosing a lower bid that has a better possibility of making more money for Mr. Brooksby and others or which he favors for other undisclosed reasons.

As part of their membership, Estates members receive the services of an acquisition assistant who attends the foreclosure sale and then bids on behalf of the chosen Estates member.[2] Estates members are also entitled to consultations with and advice from Mr. Brooksby, the Estates acquisition assistant, or both, about bidding strategies. If there is a later upset bid process, the acquisition assistant keeps the chosen Estates member informed and continues to make bids on his or her behalf. Only one member of the Estates may use its services to place public bids on properties in foreclosure, and the Estates members agree not to bid against one another.

Mr. Brooksby is entitled to some of the profits obtained from any property acquired using the Estates' services. And if an Estates member acquires property found through the Estates database, he or she owes the Estates an acquisition fee, even if he or she does not use an acquisition assistant's services.

The Estates also provides educational services to its members. Mr. Brooksby teaches Estates members about real estate, including bidding strategies on foreclosed homes. At weekly meetings, Mr. Brooksby and the acquisition assistants educate Estates members on how to use the website and internal bidding system. Mr. Brooksby also discusses his methods for increasing profits on foreclosed properties.

For example, Mr. Brooksby advises Estates members who win a bid at foreclosure to approach the owner of the foreclosed home before closing on the property in an effort to make more money with less risk. Estates members frequently retain the services of other Estates members, such as defendant Carolyn Souther, to negotiate with the homeowner, though some Estates members make the effort individually. Mr. Brooksby is often available to Estates members and their agents, such as Ms. Souther, to talk through the best strategies to use during the negotiation process.

The strategies that the Estates and Mr. Brooksby recommend vary depending on the circumstances. Estates members or their agents, including Ms. Souther, sometimes misrepresent to the homeowner that they already own the foreclosed property in an effort to obtain the property at a lower price, to obtain payment in exchange for relinquishing their putative interest, or to sell their putative interest back to the homeowner at an inflated price. On at least one occasion involving Ms. Gustafson, Ms. Souther threatened a homeowner in foreclosure with immediate eviction, contrary to what is allowed under state law.

II. Money Judgment

The jury found that the defendants engaged in bid rigging in violation of the Sherman Act, 15 U.S.C. § 1, and state antitrust law, N.C. Gen. Stat. § 75-1, in answer to Issues 1, 4, and 7, and the plaintiffs are entitled to treble damages pursuant to those laws. See 15 U.S.C. § 15; N.C. Gen. Stat. § 75-16. Thus, for their federal and state antitrust violations, the defendants named in the verdict sheet[3] are jointly and severally liable to Mr. Williams in the amount of $261, 900 ($87, 300 trebled), to Mr. da Costa and Ms. de Leon jointly in the amount of $255, 000 ($85, 000 trebled), and to Mr. Gustafson in the amount of $104, 700 ($34, 900 trebled).

The Court concludes that the attempted extortion and misrepresentations by the defendants as found by the jury in answer to Issues 2, 5, and 8 are unfair and deceptive trade practices under North Carolina law. See N.C. Gen Stat. § 75-1.1. Ms. Souther, acting on behalf of the Estates and other defendants, lied to Mr. Williams, Mr. da Costa, and Ms. de Leon about the status of their foreclosures, misrepresenting that another Estates member already owned their homes and attempting to extort money in exchange for not enforcing the Estates member's non-existent rights.[4] Ms. Souther lied to Mr. Gustafson's ex-wife about North Carolina eviction law, repeatedly telling Ms. Gustafson that her ex-husband and children would be evicted within days unless Ms. Gustafson sold her half-interest in their home. Now Mr. Gustafson owns his home with a bid-rigger, not the mother of his children. As required by statute, the damages awards as to Issues 2, 5, and 8 must be trebled. N.C. Gen. Stat. § 75-16; see, e.g., Bhatti v. Buckland, 328 N.C. 240, 243, 400 S.E.2d 440, 442 (1991). For the defendants' Chapter 75 violations, they are jointly and severally liable to Mr. Williams in the amount of $105, 000 ($35, 000 trebled), to Mr. da Costa and Ms. de Leon jointly in the amount of $150, 000 ($50, 000 trebled), and to Mr....

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